US DOL Obtains Consent Order, Judgement to Restore $6.54 Million to Union Short Term Disability Fund

CLEVELAND, OH (STL.News) The U.S. Department of Labor has obtained a consent order and judgment requiring the International Association of Sheet Metal, Air, Rail and Transportation Workers (SMART) Union and the current trustees of the SMART Group Voluntary Short Term Disability Plan (SMART VSTD Plan) to restore $6,545,454 to the Plan.

Entered in U.S. District Court for the Northern District of Ohio, in Cleveland, Ohio, the court’s action resolves a complaint the Department filed against defendants SMART, the United Transportation Union (which merged with the Sheet Metal Workers’ International Association to form SMART), SMART – Transportation Division, and trustees John Previsich, Joseph Sellers, Jr. and Richard McClees.

An investigation by the Department’s Employee Benefits Security Administration (EBSA) found fiduciaries of the SMART VSTD Plan violated the Employee Retirement Income Security Act (ERISA) by allegedly engaging in prohibited transactions. EBSA found that – from the date of establishment of the SMART VSTD Plan on Jan. 1, 2010, through the filing of the complaint – the fiduciaries transferred more than $7,000,000 from the SMART VSTD Plan and used it to compensate SMART, its field supervisors and its local union treasurers for work allegedly performed for the SMART VSTD Plan. Similar transfers of additional money continued after the Department filed its complaint on May 1, 2017.

Under the terms of the consent order and judgment, SMART will also forego collecting additional monies that have been held in abeyance for services SMART says it provided to the SMART VSTD Plan.

“The agreed resolution of this case ensures the viability of the SMART Group Voluntary Short Term Disability Plan and protects that important payroll-funded benefit for eligible participants,” said Employee Benefits Security Administration Regional Director L. Joe Rivers, in Cincinnati, Ohio.  “The U.S. Department of Labor is committed to ensuring that fiduciaries that fail to work solely in the interest of plans and participants will be held accountable. Fiduciaries that need assistance on proper management of employee benefit plans may contact the Employee Benefits Security Administration for guidance.”

The $6,545,454 restored to the SMART VSTD Plan will primarily reduce the amount of premiums paid by approximately 40,000 participants of the SMART VSTD Plan.  A portion of the restored money will provide for an independent fiduciary who will create and implement extensive processes for the selection and payment of service providers for the SMART VSTD Plan going forward.  The consent order and judgment also enjoins the defendants from future violations of ERISA.

ERISA requires fiduciaries operate employee benefit plans solely in the interest of participants and beneficiaries. Employers and workers can reach EBSA toll-free at (866) 444-3272 for help with problems related to private sector retirement and health plans.

EBSA’s mission is to assure the security of the retirement, health and other workplace related benefits of America’s workers and their families.  EBSA accomplishes this mission by developing effective regulations; assisting and educating workers, plan sponsors, fiduciaries and service providers; and vigorously enforcing the law.


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